To achieve your retirement goals, you must have the required funds, therefore for senior citizens financial professionals advise beginning investments as soon as possible during their employment years. Elderly individuals can pick from a variety of investment alternatives but are less aware of which would best enable them to have a steady income throughout their golden years. According to an interview with CA Manish P Hingar, Founder of Fintoo “Start investing as early as possible. As investing early in life enables you to get additional benefits and returns, this is a piece of advice that almost every financial expert will give you. Life is also like an investment avenue, wherein you have already invested in hard work, dedication, dreams, and, most importantly, your time. Now that you have successfully invested everything you could in giving yourself and your family a stable, secure, and stress-free life, it’s time to reap the returns and live your retired life as you wish and on your terms. Though retirement may sound like a dull phase of life, but the fact is that retirement gives you all the time to do things and pursue your dreams which you could not do due to your work and other responsibilities.”
Manish P Hingar said “While retirement gives you the required time, having the required savings is essential to pursue your retirement dreams. Thus, here are some of the most reliable investment options for senior citizens in India that will help you turn your retired life into the life of your dreams.”
Fixed income investments for senior citizens as per CA Manish P Hingar
A) Dividend-paying stocks: Some stocks pay dividends on a regular basis, and these dividends can provide a steady stream of income. Dividend-paying stocks may be a good option for those seeking regular income, but it’s important to carefully research the companies and consider the potential risks of investing in the stock market.
B) Bonds: Bonds are debt securities that are issued by companies, municipalities, and other organizations. When you buy a bond, you lend money to the issuer in exchange for interest payments and the return of principal at the end of the bond’s term. Bonds are generally considered to be less risky than stocks, and they may be a good option for those seeking a more stable source of income.
C) Annuities: Annuities are insurance products that provide a guaranteed stream of income for a specified period of time. There are several different types of annuities, and they can be an attractive option for those seeking a guaranteed source of income in retirement. However, it’s important to carefully understand the terms and conditions of an annuity before purchasing one.
D) Bank fixed deposits (FDs): FDs are a popular choice for senior citizens as they offer a fixed rate of interest and provide a regular stream of income through periodic interest payments. FDs are available for different tenures, and the rate of interest offered may vary depending on the bank and the length of the deposit.
E) Renting out a property: If you own a rental property, you may be able to generate a regular stream of income by renting it out. This can be a good option for those who have a property that is not being used and wants to generate some additional income. However, it’s important to carefully consider the potential risks and responsibilities of being a landlord before taking this step.
F) Senior Citizen Savings Scheme (SCSS): This is a government-backed savings scheme specifically designed for senior citizens. It offers a fixed rate of interest, which is currently 7.4% per annum and has a maximum investment limit of ₹15 lakh. The investment can be made in a single name or jointly with a spouse.
G) Post office monthly income scheme (POMIS): This is a savings scheme offered by the Indian postal department that offers a fixed rate of interest, currently at 6.6% per annum, and pays out a regular income to the investor through monthly installments. The maximum investment limit for a single individual is ₹4.5 lakh, while the maximum limit for a joint account is ₹9 lakh.
H) PMVVY (Pradhan Mantri Vaya Vandana Yojana): It is a pension scheme launched by the Government of India in 2017. It is designed to provide financial security to senior citizens by offering a guaranteed pension on a monthly basis. The scheme is open to individuals aged 60 years or above, and the pension is paid on a monthly basis for a period of 10 years. To participate in the scheme, individuals must make a one-time investment in the form of a purchase price, which is paid at the time of enrolment. The pension amount is based on the purchase price and is paid out to the individual on a monthly basis for the duration of the policy. The scheme is administered by the Life Insurance Corporation of India (LIC).
It is important to carefully evaluate the suitability of each option based on your financial goals and risk tolerance before making a decision. It is also a good idea to seek professional financial advice to ensure that you are making the most appropriate investment choices for your specific needs.
Fixed income investments for senior citizens as per Vivek Banka, Founding Team at GoalTeller
Senior citizens and individuals > 60 years should be careful while planning their investments. We have heard many nightmarish stories of this section of people falling prey to mis sold insurance policies where the moneys get locked in and the individuals suffer from a massive liquidity crunch.
A few basic investment options/ strategies that are simple for such individuals (presuming here that a large section of these individuals will fall in low tax brackets due to low incomes sources)
Fixed Deposits – A very simple but effective way to invest safely. Investors here should create multiple deposits so that they can withdraw some if needed. Also one can opt for the interest payout option for regular liquidity.
High Quality Corporate Bonds – High quality corporate bonds paying regular interest are a good bet where both liquidity and safety can be achieved. However one needs to be very discerning while deciding the company they are buying the bond of and not merely rely on ratings.
Equity + Fixed Deposits +Liquid Funds – In such a strategy, one can look at deploying some amounts into equities, some into fixed deposits and some into liquid funds which take care of their liquidity requirements. This strategy can generate higher returns than others but is more volatile than others.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.